Objectives of sales promotion

Sales promotion means short-term incentives that give customers a reason to buy now. Sales promotion techniques are used to attract new customers and to retain existing customers, and those two aims often need different offers. Because every offer costs money and cuts into profit margins, a business should decide what it wants the offer to achieve before choosing one.

Objectives a business might set

• Attracting new customers — giving people who have never bought from you a reason to switch.
• Clearing stock — shifting old or seasonal items to free up cash and space.
• Launching a product — getting a new item noticed in a crowded market.
• Raising awareness — putting the business name in front of people who have not heard of it.
• Encouraging trial — removing the risk of trying something new, so a triallist can become a regular buyer.
• Building loyalty — giving existing customers a reason to come back rather than switch.

Matching the technique to the objective

The technique should suit the objective, the target audience and the budget. A clumsy match wastes money: sponsorship does nothing to clear a warehouse of unsold stock, and a loyalty card means little to someone who has never bought from you.

For example, a bicycle repair shop by the sea wants more repeat business, so it gives every customer a card that earns a free service after four paid ones. Its objective is retention, so a loyalty scheme fits; a half-price service would pull in one-off visitors but give nobody a reason to come back.